Michael W. Toffel

Professor Toffel is the Senator John Heinz Professor of Environmental Management, Faculty Chair of the HBS Business and Environment Initiative, and is course head of and teaches the Technology & Operations Management core MBA course. Mike Toffel's research examines companies' management of environmental affairs and occupational safety, identifying which types of management programs and regulations improve environmental and safety performance.

His work ranges from academic articles based on econometric analyses of large datasets to case studies of individual companies. His research on occupational health and safety has been profiled by the head of U.S. OSHA and featured in the national press including US News & World Report, and Scientific American. His research has been published in many top scholarly journals including Science, Management Science, Strategic Management Journal, Administrative Science Quarterly, and Organization Science, in practitioners journals including Sloan Management Review and California Management Review, and in mainstream outlets including The Atlantic Monthly and Newsweek/DailyBeast.

Prof. Toffel serves as an Associate Editor of Management Science and on the Editorial Boards of the Strategic Management Journal and Organization Science. He is also a founding board member of the Alliance for Research on Corporate Sustainability (ARCS), which organizes a leading annual academic conference to foster high-quality research on corporate sustainability and to build collaboration among scholars engaged in these topics.

Professor Toffel received a Ph.D. from the Haas School of Business' Business and Public Policy department at the University of California at Berkeley, an MBA from the Yale School of Management, a Master’s in Environmental Management (Industrial Environmental Management) from the Yale School of Forestry & Environmental Studies, and a BA in Government from Lehigh University. He has worked as the Director of Environment, Health and Safety at the Jebsen & Jessen (South East Asia) Group of Companies, based in Singapore. He has also worked as an environmental management consultant for Arthur Andersen, Arthur D. Little, and Xerox Corporation. He started his career as an operations management analyst at J.P. Morgan.

Prof. Toffel has served on the Advisory Panel of the Newsweek Green Rankings and on the School Site Council of the Edward Devotion School, a public school in Brookline, MA.

Featured Work

CEOs are increasingly taking a stand on divisive social issues that don't directly affect their companies' bottom lines—a dramatic departure from tradition. This Harvard Business Review article explains why CEOs are speaking up, the tactics they are using, and the risks and potential rewards of doing so. It also provides a playbook to guide CEOs on what to weigh in on, when to lead or follow, and when to act alone or in coordination with others. it also highlights some research that shows that CEO activism can affect brand loyalty and public policy. In a follow-up, our article Divided We Lead: CEO Activism has Entered the Mainstream launched the HBR Big Idea series on Leadership in a Hot Button World.

This Harvard Business Review article describes lessons for business from how the U.S. Navy is operating at the front lines of climate change. Climate change will require more of the navy—new patrols of an Arctic free of sea ice, more vigilance against drought-induced state failures, and more humanitarian missions to aid climate refugees—all while shoring up its bases to make them more resilient and less vulnerable to sea level rise and melting permafrost. In this accompanying video, the former U.S. Secretary of the Navy Ray Mabus describes the planning and actions the Navy is undertaking to address climate change.

I think that most business school research should examine and help solve real-world problems that managers are facing--or that they might face in the future. This means that these scholars need to choose relevant research questions, and propose and test hypotheses that connect independent variables within the control of practitioners to outcomes they care about using logic they view as feasible. This presentation and article describe how scholars can enhance research relevance, including: (1) engaging practitioners in on-campus encounters, at managerial conferences, and at crossover workshops; (2) conducting site visits and practitioner interviews; (3) working as a practitioner; and (4) developing a practitioner advisory team. Scholars seeking to influence the practice of management also need to convey their findings and insights to practitioners. How? By presenting at practitioner conferences; writing for practitioners in crossover journals, op-eds, and blogs; and attracting the interest of those who write columns, blogs, and articles about research for practitioners. The article also offers several ideas for academic institutions-- journals, professional societies, and doctoral programs--to encourage more relevant research. This follow-up article describes how several HBS faculty conduct relevant research and communicate results to managers who can put their ideas into action. I helped organize the "Research on Effective Government: Inspection and Compliance Workshop" that brought together scholars and regulators from EPA and state-level environmental agencies to find ways to encourage more relevant research and to better communicate findings to regulators. (Image source)

Government agencies responsible for enforcing workplace safety are often at the center of controversy about whether they are effective. This Science article reports surprising findings based on randomized government inspections of single-establishment firms in California, conducted by California's labor protection agency (Cal/OSHA). These inspections led to a 9.4 percent decrease in injury rates and a 26 percent decrease in costs from medical expenses and lost wages—translating to an average of $350,000 per company. We found no evidence of any cost to inspected companies complying with regulations. These findings strongly indicate that OSHA regulations actually save businesses money. Read a related blog entry and summary article. Coauthored with Matt Johnson and David Levine. (Image source)

This research article (and summary article) show that automobile service stations in more competitive markets are more likely to falsely pass vehicle emissions tests, presumably to retain customers because car owners are less likely to return to stations that fail their emissions test. Vehicles were much more likely to pass the test if they were tested at a facility that was located near a competitor. This research suggests that managers and policymakers should be aware that competition can induce unethical behavior. Coauthors are Victor Bennett, Lamar Pierce, and Jason Snyder.

Publications

Requiring manufacturers to manage the their products when they become waste is an innovative form of regulation, one that has been adopted by countries in Asia, Europe, and North America on a variety of products that range from vehicles to appliances to batteries. However, even in many unregulated industries, some manufacturers are voluntarily assuming more responsibility for their end-of-life products, driven by customer demand and cost efficiencies. This article explores various forms of take-back regulation and highlights some of the key features of the institutions that emerge in response. In addition, six strategic product recovery alternatives are presented, followed by a discussion of some factors managers should consider in developing a take-back strategy.

Manufacturers of an expanding range of durable products are facing regulatory and market pressures to manage the products they manufactured upon their end of life (EOL). In part, this attention is motivated by a growing number of countries—especially across Europe and East Asia—that are enacting legislation that imposes greater responsibilities on manufacturers for managing their EOL products. Even in non-regulated markets, however, some manufacturers are engaging in EOL product recovery to reduce production costs, promote an image of environmental responsibility, meet changing customer expectations, protect aftermarkets, and preempt pending legislation or regulations. This article leverages transaction cost economics, capabilities, and resource dependence theories to describe when manufacturers should directly engage in product recovery efforts versus when they should leave this task to independent firms. Technologies that enhance the productivity of product recovery, the level of uncertainty associated with reverse logistics, various manufacturing-related capabilities, the uniqueness of recovered assets, and the desire to avoid dependence on other organizations are key determinants that shape the industrial organization of EOL product recovery.

Corporate sustainability has gone mainstream, and many companies have taken meaningful steps to improve their own environmental performance. But while corporate political actions such as lobbying can have a greater impact on environmental quality, they are ignored in most current sustainability metrics. It is time for these metrics to be expanded to critically assess firms based on the sustainability impacts of their public policy positions. To enable such assessments, firms must become as transparent about their corporate political responsibility (CPR) as their corporate social responsibility (CSR). For their part, rating systems must demand such information from firms and include evaluations of corporate political activity in their assessments of corporate environmental responsibility.

This article seeks to encourage scholars to conduct research that is more relevant to the decisions faced by managers and policymakers and addresses why research relevance matters, what relevance means in terms of a journal article, and how scholars can increase the relevance of their research. I define relevant research papers as those whose research questions address problems found (or potentially found) in practice and whose hypotheses connect independent variables within the control of practitioners to outcomes they care about using logic they view as feasible. I provide several suggestions for how scholars can enhance research relevance, including engaging practitioners in on-campus encounters, at managerial conferences, and at crossover workshops; conducting site visits and practitioner interviews; working as a practitioner; and developing a practitioner advisory team. I describe several ways that scholars can convey relevant research insights to practitioners, including presenting at practitioner conferences, writing for practitioners in traditional crossover journals and in shorter pieces like op-eds and blogs, and attracting the interest of those who write columns, blogs, and articles about research for practitioners. I conclude by describing a few ways that academic institutions can encourage more relevant research, focusing on journals, professional societies, and doctoral programs.

Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains. Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers’ conduct. But little is known about what influences auditors’ ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains.

Under increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance. We identify key company- and country-level factors that limit firms' use of selective disclosure by intensifying scrutiny on them and by diffusing global norms to their headquarters' countries. We test our hypotheses using a novel panel dataset of 4,750 public companies across many industries and headquartered in 45 countries during 2004–2007. Results show that firms that are more environmentally damaging, particularly those in countries where they are more exposed to scrutiny and global norms, are less likely to engage in selective disclosure. We discuss contributions to the literature that spans institutional theory and strategic management and to the literature on information disclosure.

Transnational business regulation is increasingly implemented through private voluntary programs—like certification regimes and codes of conduct—that diffuse global standards. But little is known about the conditions under which companies adhere to these standards. We conduct one of the first large-scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories' adherence to the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that suppliers are more likely to adhere when they are embedded in states that participate actively in the ILO treaty regime and that have stringent domestic labor law and high levels of press freedom. We further demonstrate that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. Taken together, these findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.

We study how government green procurement policies influence private-sector demand for similar products. Specifically, we measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and investments in green building expertise by local suppliers. These findings suggest that government procurement policies can accelerate the diffusion of new environmental standards, which require coordinated complementary investments by various types of private adopter.

Suppliers are increasingly being asked to share information about their vulnerability to climate change and their strategies to reduce greenhouse gas emissions. Their responses vary widely. We theorize and empirically identify several factors associated with suppliers being especially willing to share this information with buyers, focusing on attributes of the buyers seeking this information and of the suppliers being asked to provide it. We test our hypotheses using data from the Carbon Disclosure Project's Supply Chain Program, a collaboration of multinational corporations requesting such information from thousands of suppliers in 49 countries. We find evidence that suppliers are more likely to share this information when requests from buyers are more prevalent, when buyers appear committed to using the information, when suppliers belong to more profitable industries, and when suppliers are located in countries with greenhouse gas regulations. We find evidence that these factors also influence the comprehensiveness of the information suppliers share and their willingness to share the information publicly.

Governments and other organizations often outsource activities to achieve cost savings from market competition. Yet such benefits are often accompanied by poor quality resulting from moral hazard, which can be particularly onerous when outsourcing the monitoring and enforcement of government regulation. In this paper, we argue that the considerable moral hazard associated with private regulatory monitoring can be mitigated by understanding conflicts of interest in the monitoring organizations' product/service portfolios and by the effects of their private governance mechanisms. These organizational characteristics affect the stringency of monitoring through reputation, customer loyalty, differential impacts of government sanctions, and the standardization and internal monitoring of operations. We test our theory in the context of vehicle emissions testing in a state in which the government has outsourced these inspections to the private sector. Analyzing millions of emissions tests, we find empirical support for our hypotheses that particular product portfolios and forms of governance can mitigate moral hazard. Our results have broad implications for regulation, financial auditing, and private credit- and quality-rating agencies in financial markets.

Mandatory information disclosure regulations seek to create institutional pressure to spur performance improvement. By examining how organizational characteristics moderate establishments' responses to a prominent environmental information disclosure program, we provide among the first empirical evidence characterizing heterogeneous responses by those mandated to disclose information. We find particularly rapid improvement among establishments located close to their headquarters and among establishments with proximate siblings, especially when the proximate siblings are in the same industry. Large establishments improve more slowly than small establishments in sparse regions, but both groups improve similarly in dense regions, suggesting that density mitigates the power of large establishments to resist institutional pressures. Finally, privately held firms' establishments outperform those owned by public firms. We highlight implications for institutional theory, managers, and policymakers.

Competition among firms yields many benefits but can also encourage firms to engage in corrupt or unethical activities. We argue that competition can lead organizations to provide services that customers demand but that violate government regulations, especially when price competition is restricted. Using 28 million vehicle emissions tests from more than 11,000 facilities, we show that increased competition is associated with greater inspection leniency, a service quality attribute that customers value but is illegal and socially costly. Firms with more competitors pass customer vehicles at higher rates and are more likely to lose customers whom they fail, suggesting that competition intensifies pressure on facilities to provide illegal leniency. We also show that, at least in markets in which pricing is restricted, firms use corrupt and unethical practices as an entry strategy.

Controversy surrounds occupational health and safety regulators, with some observers claiming that workplace regulations damage firms' competitiveness and destroy jobs and others arguing that they make workplaces safer at little cost to employers and employees. We analyzed a natural field experiment to examine how workplace safety inspections affected injury rates and other outcomes. We compared 409 randomly inspected establishments in California with 409 matched-control establishments that were eligible, but not chosen, for inspection. Compared with controls, randomly inspected employers experienced a 9.4% decline in injury rates (95% confidence interval = -0.177 to -0.021) and a 26% reduction in injury cost (95% confidence interval = -0.513 to -0.083). We find no evidence that these improvements came at the expense of employment, sales, credit ratings, or firm survival.

Regulatory agencies are increasingly establishing voluntary self-reporting programs both as an investigative tool and to encourage regulated firms to commit to policing themselves. We investigate whether voluntary self-reporting can reliably indicate effective self-policing efforts that might provide opportunities for enforcement efficiencies. We find that regulators used self-reports of legal violations as a heuristic for identifying firms that are effectively policing their own operations, shifting enforcement resources away from those that voluntarily disclose. We also find that these firms that voluntarily disclosed regulatory violations and committed to self-policing improved their regulatory compliance and environmental performance, which suggests that the enforcement relief they received was warranted. Collectively, our results suggest that self-reporting can be a useful tool for reliably identifying and leveraging the voluntary self-policing efforts of regulated companies.

Several studies have examined how the ISO 9001 Quality Management System standard predicts changes in organizational outcomes such as profits. This is the first large-scale study to explore how employee outcomes such as employment, earnings, and health and safety change when employers adopt ISO 9001. We analyzed a matched sample of nearly 1,000 companies in California. ISO 9001 adopters subsequently had far lower organizational death rates than a matched control group of non-adopters. Among surviving employers, ISO adopters had higher growth rates for sales, employment, payroll, and average annual earnings. Injury rates declined slightly for ISO 9001 adopters, although total injury costs did not. These results have implications for organizational theory, managers, and public policy.

While many rating systems seek to help buyers overcome information asymmetries when making purchasing decisions, we investigate how these ratings also influence the companies being rated. We hypothesize that ratings are particularly likely to spur responses from firms that receive poor ratings, and especially those that face lower-cost opportunities to improve or that anticipate greater benefits from doing do. We test our hypotheses in the context of corporate environmental ratings that guide investors to select "socially responsible," and avoid "socially irresponsible," companies. We examine how several hundred firms respond to corporate environmental ratings issued by a prominent independent social rating agency and take advantage of an exogenous shock that occurred when the agency expanded the scope of its ratings. Our study is among the first to theorize about the impact of ratings on subsequent performance, and we introduce important contingencies that influence firm response. These theoretical advances inform stakeholder theory, institutional theory, and economic theory.

Using data from a sample of U.S. industrial facilities subject to the federal Clean Air Act from 1993 to 2003, this article theorizes and tests the conditions under which organizations' symbolic commitments to self-regulate are particularly likely to result in improved compliance practices and outcomes. We argue that the legal environment, particularly as it is constructed by the enforcement activities of regulators, significantly influences the likelihood that organizations will effectively implement the self-regulatory commitments they symbolically adopt. We investigate how different enforcement tools can foster or undermine organizations' normative motivations to self-regulate. We find that organizations are more likely to follow through on their commitments to self-regulate when they (and their competitors) are subject to heavy regulatory surveillance and when they adopt self-regulation in the absence of an explicit threat of sanctions. We also find that historically poor compliers are significantly less likely to follow through on their commitments to self-regulate, suggesting a substantial limitation on the use of self-regulation as a strategy for reforming struggling organizations. Taken together, these findings suggest that self-regulation can be a useful tool for leveraging the normative motivations of regulated organizations but that it cannot replace traditional deterrence-based enforcement.

The challenges associated with climate change will require governments, citizens, and firms to work collaboratively to reduce greenhouse gas emissions, a task that requires information on companies' emissions levels, risks, and reduction opportunities. This paper explores the conditions under which firms participate in this endeavor. Building on theories of how social activists inspire changes in organizational norms, beliefs, and practices, we hypothesize that shareholder actions and regulatory threats are likely to prime firms to adopt practices consistent with the aims of a broader social movement. We find empirical evidence of direct and spillover effects. In the domain of private politics, shareholder resolutions filed against it and others in its industry increase a firm's propensity to engage in practices consistent with the aims of the related social movement. Similarly, in the realm of public politics, threats of state regulations targeted at a firm's industry as well as regulations targeted at other industries increase the likelihood that the firm will engage in such practices. These findings extend existing theory by showing that both activist groups and government actors can spur changes in organizational practices, and that challenges mounted against a single firm and an industry can inspire both firm and field-level changes.

Ratings of corporations' environmental activities and capabilities influence billions of dollars of "socially responsible" investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings—those of Kinder, Lydenberg, Domini Research & Analytics (KLD)—provide transparency about past and likely future environmental performance. We find KLD "concern" ratings to be fairly good summaries of past environmental performance. In addition, firms with more KLD concerns have slightly, but statistically significantly, more pollution and regulatory compliance violations in later years. KLD environmental strengths, in contrast, do not accurately predict pollution levels or compliance violations. Moreover, we find evidence that KLD's ratings are not optimally using publicly available data. We discuss the implications of our findings for advocates and skeptics of corporate social responsibility as well as for studies that relate social responsibility ratings to financial performance.

This paper combines new and old institutionalism to explain differences in organizational strategies. We propose that differences in the influence of corporate departments lead their facilities to prioritize different external pressures and thus adopt different management practices. Specifically, we argue that external constituents—including customers, regulators, legislators, local communities, and environmental activist organizations—who interact with influential corporate departments are more likely to affect facility managers' decisions. As a result, managers of facilities that are subjected to comparable institutional pressures adopt distinct sets of management practices that appease different external constituents. We test our framework in the context of the adoption of environmental management practices using an original survey and archival data obtained for nearly 500 facilities. We find support for these hypotheses.

As part of a recent trend toward more cooperative relations between regulators and industry, novel government programs are encouraging firms to monitor their own regulatory compliance and voluntarily report their own violations. In this study, we examine how regulatory enforcement activities influence organizations' decisions to self-police. We created a comprehensive data set for the "Audit Policy," a United States Environmental Protection Agency program that encourages companies to self-disclose violations of environmental laws and regulations in exchange for reduced sanctions. We find that facilities are more likely to self-disclose if they were recently subjected to one of several different enforcement measures and if they were provided with immunity from prosecution for self-disclosed violations.

Despite burgeoning research on companies' environmental strategies and environmental management practices, it remains unclear why some firms adopt environmental management practices beyond regulatory compliance. This paper leverages institutional theory by proposing that stakeholders - including governments, regulators, customers, competitors, community and environmental interest groups, and industry associations - impose coercive and normative pressures on firms. However, the way in which managers perceive and act upon these pressures at the plant level depends upon plant- and parent-company-specific factors, including their track record of environmental performance, the competitive position of the parent company and the organizational structure of the plant. Beyond providing a framework of how institutional pressures influence plants' environmental management practices, various measures are proposed to quantify institutional pressures, key plant-level and parent-company-level characteristics and plant-level environmental management practices

Many production processes are subject to inspection to ensure they meet quality, safety, and environmental standards imposed by companies and regulators. Inspection accuracy is critical to inspections being a useful input to assessing risks, allocating quality improvement resources, and making sourcing decisions. This paper examines how the scheduling of inspections risks introducing bias that erodes inspection quality by altering inspector stringency. In particular, we theorize that inspection results are affected by (a) the inspection outcomes at the inspector’s prior inspected establishment and (b) when the inspection occurs within an inspector’s daily schedule. Analyzing thousands of food safety inspections of restaurants and other food-handling establishments, we find that inspectors cite more violations after inspecting establishments that exhibited worse compliance or greater deterioration in compliance. Inspectors cite fewer violations in successive inspections throughout the day and when inspections risk prolonging their typical workday. Our estimates suggest that, if the outcome effects were amplified by 100% and the daily schedule effects were fully mitigated (that is, reduced by 100%), the increase in inspectors’ detection rates would result in their citing an average of 9.9% more violations. Understanding these biases can help managers develop alternative scheduling regimes that reduce bias in quality assessments in domains such as food safety, process quality, occupational safety, working conditions, and regulatory compliance.

Exploitive working conditions have spurred companies to pressure their suppliers to adopt labor codes of conduct and to conform their labor practices to the standards set forth in those codes. Yet little is known about whether organizational structures such as codes are associated with improvements in supplier labor practices, especially in organizations in which they compete with productivity-driving incentive structures. We investigate under what internal structural conditions suppliers’ labor practices are likely to become more tightly aligned—or coupled—with their formal commitments to labor codes of conduct. Using data on 3,276 suppliers in 55 countries, we find that in suppliers with high-powered efficiency structures (piece-rate pay), labor codes are internally buffered and thus less tightly coupled with labor practices; yet, tighter coupling is more likely in suppliers with certain types of managerial structures (certified management system and unions). We also find important interactions between these organizational structures: managerial structures offset efficiency structures and the presence of multiple managerial structures within a single supplier hastens improvement. Our focus on the internal structural dynamics of suppliers extends the existing decoupling literature and provides the first empirical investigation of internal buffering of multiple organizational structures. Furthermore, our findings suggest important strategic considerations for managers selecting supplier factories and provide key insights for the design of transnational sustainability governance regimes.

Worker rights advocates seeking to improve labor conditions in global supply chains have engaged in private politics that led transnational corporations (TNCs) to adopt codes of conduct and to monitor their suppliers for compliance, but it is not clear whether or when these organizational structures can actually raise labor standards. We extend the literature on private politics and decoupling by identifying structural contingencies in the institutional environment and in program design under which codes and monitoring are more likely to go beyond mere symbolism and to be associated with improvements in supply chain working conditions. At the institutional level, we find that suppliers improve working conditions more when they face greater exposure risk from their domestic civil society and when their buyers are more sensitive to such exposure. At the program design level, we find that suppliers improve more when the monitoring regime signals a cooperative approach and when auditors are highly trained. We also identify several structural contingencies among and between institutional and program design features. These findings advance theory and provide new empirical insights on the outcomes of private political activism and suggest key considerations to inform monitoring strategies aimed at improving working conditions in global supply chains.

CEO activism refers to corporate leaders speaking out on social and environmental policy issues not directly related to their company’s core business. Distinct from nonmarket strategy and traditional corporate social responsibility, the recent wave of CEO activism focuses on social issues unrelated to their core business, ranging from environmental issues to LGBT rights and race relations. In the first study of this phenomenon, we implement two field experiments to provide evidence on how CEO activism can influence public opinions about government policies and consumer attitudes about the CEO’s company.

Government agencies are increasingly turning to private, third-party monitors to inspect and assess regulated entities’ compliance with law. The integrity of these regulatory regimes rests on the validity of the information third-party monitors provide to regulators. The challenge in designing third-party monitoring regimes is that profit-driven private monitors, typically selected and paid by the firms subject to monitoring, have incentives to downplay problems they observe in order to satisfy and retain their clients. This paper discusses the most important factors that our research and the research of many others has shown can affect the integrity of third-party monitoring and highlights some policy implications for regulators designing third-party monitoring regimes.

In response to stakeholders' growing concerns, companies are joining voluntary environmental programs to signal their superior environmental management capabilities. In contrast to the literature's focus on certification programs that require a third-party audit, we show that corporate participation in programs that lack certification but instead incorporate civil society scrutiny can, under certain conditions, serve as a credible signal of environmental management capabilities by discouraging firms with inferior capabilities from joining. Specifically, we hypothesize that (a) institutional environments that support civil society scrutiny and (b) organizational characteristics that increase the impact of that scrutiny enhance the credibility of the signal. We find empirical support for these hypotheses by examining the decisions by nearly 2,600 companies in 44 countries whether to participate in the United Nations Global Compact.

Process-improvement ideas often come from frontline workers who speak up by voicing concerns about problems and by taking charge to resolve them. We hypothesize that organization-wide process-improvement campaigns encourage both forms of speaking up, especially voicing concern. We also hypothesize that the effectiveness of such campaigns depends on the prior responsiveness of line managers. We test our hypotheses in the healthcare setting, in which problems are frequent. We use data on nearly 7,500 reported incidents extracted from an incident-reporting system that is similar to those used by many organizations to encourage employees to communicate about operational problems. We find that process-improvement campaigns prompt employees to speak up and that campaigns increase the frequency of voicing concern to a greater extent than they increase taking charge. We also find that campaigns are particularly effective in eliciting taking charge among employees whose managers have been relatively unresponsive to previous instances of speaking up. Our results therefore indicate that organization-wide campaigns can encourage voicing concerns and taking charge, two important forms of speaking up. These results can enable managers to solicit ideas from frontline workers that lead to performance improvement.

Firms and regulators are increasingly relying on voluntary mechanisms to signal and infer quality of difficult-to-observe management practices. Prior evaluations of voluntary management programs have focused on those that lack verification mechanisms and have found little evidence that they legitimately distinguish adopters as having superior management practices or performance. In this paper, I conduct one of the first evaluations to determine whether a voluntary management program that features an independent verification mechanism is achieving its ultimate objectives. Using a sample of thousands of manufacturing facilities across the United States, I find evidence that the ISO 14001 Environmental Management System Standard has attracted companies with superior environmental performance. After developing quasi-control groups using propensity score matching, I also find that adopters subsequently improve their environmental performance. These results suggest that robust verification mechanisms such as independent certification may be necessary for voluntary management programs to mitigate information asymmetries surrounding management practices. Implications are discussed for the industry-associations, government agencies, and the non-governmental organizations that design these programs, the companies that are investing resources to adopt them, and those that are relying on them to infer the quality of management practices.

A key role of corporate managers is to encourage subsidiaries to adopt innovative practices. This paper examines the conditions under which corporate managers use information provision to encourage subsidiaries' adoption of advanced management practices. Focusing on the distribution of expertise across subsidiaries, we propose that corporate managers elect an information provision strategy when (i) subsidiaries, on average, possess moderate levels of related expertise, (ii) subsidiaries exhibit significant heterogeneity in this expertise, and (iii) the subsidiaries are more diversified and less concentrated. We examine the efforts to diffuse pollution prevention practices exhibited by manufacturing firms in the information and communication technology sector in the United States, and find empirical support for the four hypotheses developed here. The research presented in this paper has implications for our understanding not only of who adopts advanced environmental management practices, but more broadly, of when firms adopt information provision strategies to encourage knowledge transfer within the organization.

Manufacturers are increasingly being required to adhere to product take-back regulations that require them to manage their products at the end of life. Such regulations seek to internalize products' entire life cycle costs into market prices, with the ultimate objective of reducing their environmental burden. This article provides a framework to evaluate the potential for take-back regulations to actually lead to reduced environmental impacts and to stimulate product design changes. It describes trade-offs associated with several major policy decisions, including whether to hold firms physically or financially responsible for the recovery of their products, when to impose recycling fees, whether to include disposal and hazardous substance bans, and whether to mandate product design features to foster reuse and recycling of components and materials. The framework also addresses policy elements that can significantly affect the cost efficiency and occupational safety hazards of end-of-life product recovery operations. The evaluation framework is illustrated with examples drawn from take-back regulations promulgated in Europe, Japan, and the United States governing waste electrical and electronic equipment (WEEE).

Servicizing, a novel business practice that sells product functionality rather than products, has been touted as an environmentally beneficial business practice. This paper describes how servicizing transactions mitigate some problems associated with sales transactions, but creates several others. The success of servicizing—or product service systems—requires manufacturers to develop contracts that attract customers while protecting their interests. Several propositions are offered to facilitate empirical testing of the concepts discussed.

Corporate sustainability has gone mainstream, and many companies have taken meaningful steps to improve their own environmental performance. But while corporate political actions such as lobbying can have a greater impact on environmental quality, they are ignored in most current sustainability metrics. It is time for these metrics to be expanded to critically assess firms based on the sustainability impacts of their public policy positions. To enable such assessments, firms must become as transparent about their corporate political responsibility (CPR) as their corporate social responsibility (CSR). For their part, rating systems must demand such information from firms and include evaluations of corporate political activity in their assessments of corporate environmental responsibility.

Leaders in all sectors, from business to sports to education, are increasingly wading into controversial political and social issues. Based on interviews with leaders who have made activism part of their core activities, we found that they feel compelled to address hot-button issues and are guided by their own values as well as the history and culture of their organization. They also complement their public activities with a “ground game” executed out of the limelight.

Whereas some organizational leaders are engaging in CEO activism by speaking out on social and political issues not directly related to their bottom line, some leaders want to avoid doing so. Some, in fact, hold neutrality as a core component of their strategy. But maintaining nonpartisanship in an increasingly polarized world is a difficult task. It means—in some ways—that those leaders have to become activists for neutrality. Perhaps no one has a better understanding of how this works than Max Stier, the CEO of the Partnership for Public Service, a nonprofit nonpartisan organization that works with political administrations to hire and train political appointees. We interviewed Stier for our HBR Big Idea series “Divided We Lead,” and this is a condensed and edited version of our conversation.

Though corporations have been lobbying the government and making campaign donations for a long time now, in recent years a dramatic new trend has emerged in U.S. politics: CEOs are taking very public stands on thorny political issues that have nothing to do with their firms’ bottom lines. Business leaders like Tim Cook of Apple, Howard Schultz of Starbucks, and Marc Benioff of Salesforce—among many others—are passionately advocating for a range of causes, including LGBTQ rights, immigration, the environment, and racial equality. Not only are CEOs speaking out, but they’re flexing their firms’ economic muscles by threatening to move business activities out of states that pass controversial laws. But does CEO activism actually change public opinion and policies? What are its risks and rewards? And what is the playbook for leaders considering speaking out? The authors of this article examine those questions and explain the takeaways of their own research. One finding: Consumers tend to view CEO activism through the lens of their own political affiliations, so it can provoke both negative and positive responses. Nevertheless, in the age of Twitter, silence on an issue can be conspicuous—and consequential.

The U.S. Navy operates on the front lines of climate change. It manages tens of billions of dollars in assets on every continent and on every ocean, which take many years to design and build and then have decades of useful life. This means that it needs to understand now what sorts of missions it may be required to perform in 10, 20, or 30 years and what assets and infrastructure it will need to carry them out. Put another way, it needs to plan for the world that will exist at that time. The navy is clear eyed about the challenges climate change poses. It knows that the effects of a warmer world will expand the geographic scope of its mission and increase demand for its military and humanitarian services. Climate change will also decrease its capacity to deliver those services, as the risk of damage to its bases and ports increases. This article examines the Navy’s approach to climate change and reflects on the implications for business.

We talk about how a giant, global enterprise that operates and owns assets at sea level is fighting climate change—and adapting to it. We discuss what the private sector can learn from the U.S. Navy’s scientific and sober view of the world. We are also the authors of “Managing Climate Change: Lessons from the U.S. Navy” in the July–August 2017 issue of Harvard Business Review.

Government agencies are increasingly turning to private, third-party monitors to inspect and assess regulated entities’ compliance with law. The integrity of these regulatory regimes rests on the validity of the information third-party monitors provide to regulators. The challenge in designing third-party monitoring regimes is that profit-driven private monitors, typically selected and paid by the firms subject to monitoring, have incentives to downplay problems they observe in order to satisfy and retain their clients. This paper discusses the most important factors that our research and the research of many others has shown can affect the integrity of third-party monitoring and highlights some policy implications for regulators designing third-party monitoring regimes.

Some CEOs are making news by taking public stances on controversial social issues largely unrelated to their core business. This article summarizes the insights from our research paper that shows that such "CEO activism" can influence public opinion and consumer attitudes.

When Starbucks CEO Howard Schultz asked his baristas to engage customers in a discussion about race in America, it was a clear case of the growing trend of "CEO activism." Despite the criticism of that particular initiative, CEO activism—from Shultz to Chick-Fil-A's Dan Cathy to Facebook's Sheryl Sandberg to Goldman Sach's Lloyd Blankfein—represents a step forward for corporate involvement in the public square because these efforts are unusually transparent and delimited. As such, CEO activism is a welcome counterpoint to the largely hidden involvement of corporate leaders in shaping policy through the hundreds of millions of dollars they direct to Super PACs, trade associations, and think tanks to promote liberal and conservative causes.

For companies with strong internal occupational safety and health auditing programs, OSHA inspections might seem a formality that risk uncovering, at most, nitpicky deviations from the thousands of pages of safety regulations. For those with poor safety practices, OSHA inspections can result in penalties and bad press that risk impugning the company's reputation. Both of these accounts suggest that for managers, the fewer OSHA inspections the better. The results of our research call for a much more welcoming attitude, given we found that inspections by Cal/OSHA, California's health and safety regulator, led to substantial reductions in injuries and workers' compensation costs.

One of the largest gaming companies in the world expanded its sustainability efforts using a scorecard to guide and goad managers. This response assesses Caesars Entertainment's CodeGreen scorecard, advocates a more comprehensive environmental assessment to target subsequent improvement efforts, and describes how the company can leverage and scale its environmental efforts by advocating climate change mitigation policies within its supply chain and in government policy.

Codes of conduct indicate that working conditions are improving overall at the factories being monitored by multinational corporations, and that these codes of conduct also create possibilities for political mobilization that can improve labor conditions more broadly.

Spurred by the anti-regulation movement that started in the 1970s, voluntary self-regulation programs have emerged in many regulatory agencies, seeking to increase cooperation between government and industry to achieve greater and more cost-effective compliance. "Beyond compliance" programs recognize and reward firms for practices that go above and beyond the requirements of the law. "Self-policing" programs adopted by several agencies shift the burden of monitoring regulatory compliance and reporting noncompliance from the government to the private sector. Policymakers often refer to these programs as a win-win-win scenario: compliance improves, regulators conserve enforcement resources, and firms save money. But this outcome can only be achieved if the self-regulatory activities of corporations can effectively substitute for government enforcement, a largely untested assumption that our research examines. We find that, to the contrary, the success of voluntary regulation is contingent on a robust regime of government inspection and enforcement. Within such a regime, we find that voluntary compliance efforts by regulated firms can actually lead to improved environmental performance. In summary, the polarized claims that corporate voluntary regulation represents a win-win opportunity—or constitutes a smokescreen that allows firms to operate with less regulatory oversight—are misguided. Instead, the key to efficient and effective regulatory design is finding the right mix of public and private regulatory activities.

Innovative regulatory programs are encouraging firms to police their own regulatory compliance and voluntarily disclose, or "confess," the violations they find. Despite the "win-win" rhetoric surrounding these government voluntary programs, it is not clear why companies would participate and whether the programs themselves do anything to enhance regulatory effectiveness. Tasked with monitoring the legality of its own operations, why would a firm that identifies violations turn itself in to regulators rather than quietly fix the problem? And why would regulators entrust regulated entities to monitor their own compliance and enforce the law against themselves? This paper addresses these questions by investigating the factors that lead organizations to self-disclose violations, the effects of self-policing on regulatory compliance, and the effects of self-disclosing on the relationship between regulators and regulated firms. We investigate these research questions in the context of the U.S. Environmental Protection Agency's Audit Policy.

This case study describes how an industrial design company developed a sustainability management system (SMS) standard, designed and implemented an SMS throughout its business, and then became the first company in the world to achieve third-party SMS certification by a third-party certification organisation.

Manufacturers of an expanding range of durable products are facing regulatory and market pressures to manage the products they manufactured upon their end of life (EOL). In part, this attention is motivated by a growing number of countries—especially across Europe and East Asia—that are enacting legislation that imposes greater responsibilities on manufacturers for managing their EOL products. Even in non-regulated markets, however, some manufacturers are engaging in EOL product recovery to reduce production costs, promote an image of environmental responsibility, meet changing customer expectations, protect aftermarkets, and preempt pending legislation or regulations. This article leverages transaction cost economics, capabilities, and resource dependence theories to describe when manufacturers should directly engage in product recovery efforts versus when they should leave this task to independent firms. Technologies that enhance the productivity of product recovery, the level of uncertainty associated with reverse logistics, various manufacturing-related capabilities, the uniqueness of recovered assets, and the desire to avoid dependence on other organizations are key determinants that shape the industrial organization of EOL product recovery.

Requiring manufacturers to manage the their products when they become waste is an innovative form of regulation, one that has been adopted by countries in Asia, Europe, and North America on a variety of products that range from vehicles to appliances to batteries. However, even in many unregulated industries, some manufacturers are voluntarily assuming more responsibility for their end-of-life products, driven by customer demand and cost efficiencies. This article explores various forms of take-back regulation and highlights some of the key features of the institutions that emerge in response. In addition, six strategic product recovery alternatives are presented, followed by a discussion of some factors managers should consider in developing a take-back strategy.

In Asia, Europe, and North America, regulators are seeking to reduce waste disposal and develop recycling markets by requiring manufacturers to manage the end-of-life disposition of products they produce. Such policies attempt to "close the loop" for products ranging from electronics to vehicles by creating incentives for manufacturers to increase the usage intensity of materials embodied in their products to reduce the demand for virgin raw materials and energy. This article describes take-back regulations and highlights some of their key features. In addition, several product take-back strategies are presented along with a few key questions managers should consider in selecting an appropriate strategy for their company.

This article describes preliminary results and ongoing challenges faced by Designworks/USA, an industrial design subsidiary of BMW Group, in its sustainability management efforts since it implemented the world's first certified Sustainability Management System (SMS). In addition, the extent to which the SMS promotes BMW Group's commitment to implement the United Nations Global Compact's human rights, labor, and environmental principles is analyzed. A detailed description of the development of a SMS standard and its deployment throughout the business operations of Designworks/USA was provided in the previous issue of CES Journal.

This article describes how Designworks/USA, a subsidiary of BMW Group, developed a Sustainability Management System (SMS) by integrating the management of environmental, social, and traditional business issues. After several months of deploying the SMS throughout its business operations, this industrial design company became the first organization in the world to achieve third-party certification of a SMS. An article in the next issue of CES Journal will describe the preliminary outcomes of the SMS and challenges Designworks/USA faces in its ongoing SMS development efforts. In addition, that article will describe how the SMS is facilitating BMW Group's commitment to implement the United Nations Global Compact's human rights, labor, and environmental principles.

A broad literature has emerged over the past decades demonstrating that firms' environmental strategies and practices are influenced by stakeholders and institutional pressures. Such findings are consistent with institutional sociology, which emphasizes the importance of regulatory, normative, and cognitive factors in shaping firms' decisions to adopt specific organizational practices, above and beyond their technical efficiency. Similarly, institutional theory emphasizes legitimation processes and the tendency for institutionalized organizational structures and procedures to be taken for granted, regardless of their efficiency implications. However, the institutional perspective does not address the fundamental issue of business strategy necessary to explain the persistence of substantially different strategies among firms that are subjected to comparable levels of institutional pressures. In this chapter, we present current research arguing that such firms adopt heterogeneous sets of environmental management practices despite facing common institutional pressures because organizational characteristics lead managers to interpret these pressures differently.

The United States (US) and the European Union (EU) are federal systems in which the responsibility for environmental policy-making is divided or shared between the central government and the (member) states. The attribution of decision-making power has important policy implications. This chapter compares the role of central and local authorities in the US and the EU in formulating environmental regulations in three areas: automotive emissions for health-related (criteria) pollutants, packaging waste, and global climate change. Automotive emissions are relatively centralised in both political systems. In the cases of packaging waste and global climate change, regulatory policy-making is shared in the EU, but is primarily the responsibility of local governments in the US. Thus, in some important areas, regulatory policy-making is more centralised in the EU. The most important role local governments play in the regulatory process is to help diffuse stringent local standards through more centralised regulations, a dynamic which has recently become more important in the EU than in the US.

Scholars of management have long considered how institutions can help resolve market imperfections and thereby improve human welfare. Most previous research has emphasized the use of for-profit firms. Such institutions cannot effectively address many environmental problems, however, because environmental problems often transcend firm boundaries. As a result, management scholars have begun to explore the use of more distributed institutional forms. In this article, we review the emerging scholarship on the formation and function of self-regulatory institutions.

SA 8000, along with other types of certification standards and corporate codes of conduct, represents a new form of private governance of working conditions, initiated and implemented by companies, labor unions, and non-governmental activist groups. Whether these codes represents a substantive or merely symbolic approach to governing working conditions is the subject of an ongoing debate, which to date has been dominated by philosophical and political discourse due to a lack of systematic evaluation. Very little empirical evidence is available to indicate whether these codes legitimately distinguish adopting companies and factories as providing better working environments (e.g., health and safety, freedom of association, fair pay practices) and whether these codes have affected their business outcomes (e.g., staff turnover and absenteeism, product defect rates, sales growth). In this book chapter, we review the existing evaluations of other private codes governing workplace conditions, including the Ethical Trading Initiative's Base Code, Nike's code of conduct, and Fair Trade. We then describe several key elements of program evaluation that are becoming standard practice in other domains, which we believe should be incorporated in future evaluation studies of these codes. We emphasize the importance of examining performance over time, comparing adopters to non-adopters, and incorporating strategies to overcome selection bias. Evaluations that meet the highest methodological standards are critical to inform the debates about this new form of private governance, and to highlight opportunities for improvement in their standards and monitoring procedures.

The United States (US) and the European Union (EU) are federal systems in which the responsibility for environmental policy-making is divided or shared between the central government and the (member) states. The attribution of decision-making power has important policy implications. This chapter compares the role of central and local authorities in the US and the EU in formulating environmental regulations in three areas: automotive emissions, packaging waste, and global climate change. Automotive emissions are relatively centralised in both political systems. In the cases of packaging waste and global climate change, regulatory policy-making is shared in the EU but is primarily the responsibility of local governments in the US. Thus, in some important areas, regulatory policy-making is relatively centralised in the EU. The most important role local governments play in the regulatory process is to help diffuse stringent local standards through centralised regulation, a dynamic which has become more common in the EU than in the US.

This case study describes how an industrial design company developed a Sustainability Management System (SMS) standard, designed and implemented an SMS throughout its business, and then became the first company in the world to achieve third-party SMS certification. The case also describes ongoing development and challenges and examines how the SMS has facilitated the implementation of the United Nations Global Compact.

In the summer of 2018, San Francisco-based electronic cigarette (e-cigarette) maker JUUL Labs, was experiencing exponential growth. Sales of its JUUL e-cigarette had increased by 783% over the preceding year, projected revenues for 2018 topped $940 million, and the company had captured over 72% of the U.S. e-cigarette market. The company’s success had thrust it into the spotlight, and JUUL Labs found itself at the center of considerable controversy. Whereas the company’s stated goal was to provide tobacco smokers with a less harmful e-cigarette alternative, JUUL Labs’s products had proven widely popular with teenage high school students who had never smoked. Some advocacy groups and public policy makers speculated that the company had purposefully marketed its products to minors—an allegation JUUL Labs’s executives strongly denied. The company now faced an FDA probe and investigations by at least two state attorney generals. It needed a strategy to deal with its mounting regulatory and public relations problems.

By 2018, it was clear that U.S. Green Building Council (USGBC) had significantly contributed to the growth of green building and over its 25-year history had become a powerful brand in the construction sector with its Leadership in Energy and Environmental Design (LEED) standard. Nonetheless, USGBC faced two significant challenges moving forward: maintaining LEED’s leadership position as the green building standard in the U.S. and increasing the proportion of building stock that met the LEED standard. The case provides background on the USGBC and the evolution of its LEED standard, including how the standards are set and green building benefits and costs.

Managers make predictions all the time: How fast will my markets grow? How much inventory do I need? How intensively should I monitor my suppliers? Which potential customers will be most responsive to a particular marketing campaign? Which job candidates should I employ? Machine learning, data science, big data, and predictive analytics all use statistical techniques to predict an outcome. This case enables students to begin using data to make predictions and teaches the core metrics to evaluate how accurate predictions are. It helps students understand how to choose among alternative model specifications and introduces the concepts of overfitting and in-sample versus out-of-sample prediction. The case discussion also promotes an understanding of factors beyond prediction accuracy—such as transparency and perceived fairness—that managers need to consider when deciding which predictive algorithm to deploy. The class discussion also helps students appreciate the differences between prediction, correlation, and causation. The case protagonist recently joined a new data science team at the U.S. Occupational Safety and Health Administration (OSHA), a government agency, and needs to evaluate and recommend one of several alternative approaches that OSHA should use to improve how it targets its government inspections of workplaces to better assure safe working conditions. The case includes a dataset and exercise.

This note describes four broad categories of process architectures and then examines the nature of task assignment that typically would be found in a factory organized along the lines of each process type. It then delves more deeply into work flow policies, materials handling, and line pacing for the assembly line, since this process architecture is so widely used for the mass production of everything from smartphones to automobiles.

This case introduces CEO activism, a phenomenon in which business leaders engage in political or social issues that do not relate directly to their companies. The case uses several examples to describe why business leaders are engaging in CEO activism and the potential benefits and drawbacks: (1) how Angie’s List’s CEO responded to the state of Indiana passing a controversial religious freedom law; (2) how Duke Energy’s CEO supported pending U.S. legislation addressing climate change, and (3) how Chobani Yogurt’s CEO publicly supported refugees. Students are then provided with the situation faced by PayPal CEO Dan Schulman after North Carolina passed House Bill 2, which Schulman perceived as discriminatory against LGBTQ (lesbian, gay, bisexual, transgender, and queer) individuals. Students are asked to consider whether Schulman should engage in CEO activism and, if so, how best to approach the situation. The (B) case provides an update on Schulman’s decision.

Indigo Agriculture had successfully developed and launched its first commercial product, microbe-enhanced cotton seeds, on an accelerated product development timeline. In late 2016, as the company was about to launch its second product, winter wheat, the management team proposed to again accelerate the development timeline and introduce six new products in four countries within the next 12 months. The CEO and Director of Business Development met to discuss the feasibility of accelerating the timeline, potential bottlenecks in the product development process, resource management, and the potential need for a more formalized development process.

This note introduces key managerial issues in new product development. It describes the product development funnel and alternative approaches to structuring product development teams including functional, lightweight, heavyweight, and autonomous/dedicated teams, which vary in their capacity to manage integration. More formal product development approaches including the stage-gate process and critical-path method are described, as are agile methods and principles—and related tools such as scrum, extreme programming, feature-driven development. Product development metrics including lead time, capacity, and productivity are defined and discussed.

Environmental activist groups have traditionally opposed nuclear energy. However, the growing environmental problems associated with global climate change require major changes to reduce the carbon intensity of electricity generation. Should environmental groups reverse course and support the construction of new nuclear plants—using technology that could be rapidly deployed at scale—to reduce greenhouse gas emissions that are causing global climate change?

This case asks students to take the perspective of a nuclear energy industry association whose objective is convincing politicians and the public about the merits of its industry. The association is considering whether to approach environmental nongovernmental organizations to encourage them to publicly support its mission of making politicians and local communities more amenable to nuclear power because it can substantially reduce the carbon intensity of electricity.

By 2014, IKEA Group was the largest home furnishing company, with EUR28.5 billion of sales, and planned to reach EUR50 billion by 2020, mainly from emerging markets. At the same time, IKEA Group had adopted in 2012 a new sustainability strategy that focused the company's efforts on its entire value chain from its raw materials sourcing to the lifestyle of its end consumers. The plan especially centered on wood, which represented 60% of IKEA Group's total procurement in volume and constituted a key lever for the company to increase its positive impact on sustainability. IKEA Group Management therefore had to decide how to manage its portfolio of wood sustainability initiatives, especially in the context of the company's aggressive growth plan.

Can IKEA Group double its global sales within a decade by expending in emerging markets while implementing on its ambitious sustainability strategy that included focusing on raw material sourcing and suppliers’ production processes? The case focuses on IKEA Group’s efforts to manage the environmental impacts associated with its use of wood, which constituted the majority of its total procurement volume. The company needs to design and deploy a sustainability plan to procure wood to support production processes and stores located throughout the world, especially in the context of the company’s aggressive growth plans.

This video contains Q&A with IKEA Group's Chief Sustainability Officer Steve Howard and IKEA Group's Industrial Strategy Manager Per Berggren, the two primary case protagonists. They respond to student questions after the case was taught at an executive education class session at Harvard Business School.

Groom Energy Solutions helps organizations reduce their energy use and costs through the implementation of energy efficiency measures, which create long-term financial and environmental benefits. With early success serving customers in the cold storage and industrial manufacturing sectors, the seven-year-old company must now decide whether to continue expanding within these segments or transition into commercial retail and office buildings, which offer growth potential and unique challenges. Groom Energy must also decide which geographic regions provide the best opportunity.
This case study provides background on the history of the energy efficiency industry, the energy efficiency paradox, and the benefits and challenges of a business focused on implementing efficiency measures. The case is particularly relevant to courses focused on energy management, environmental sustainability, and entrepreneurship within the energy and sustainability areas.

This case examines a start-up service provider that helps clients improve the energy efficiency of their factories, warehouses, and commercial and office spaces by integrating and installing lighting, heating, and cooling technologies. The company seeks to double revenues within five years and needs to identify which service offerings to emphasize and which geographies and customer sectors to pursue. The case enables students to explore the “energy efficiency paradox,” which is that many energy-efficient technologies that offer both financial and environmental benefits are not being adopted. Students gain an appreciation of the potential causes of this paradox, including information asymmetry, the substantial investment required to gain expertise to evaluate technologies, measurement challenges associated with forecasting and monitoring the benefits of these technologies, and energy being underpriced compared to its social cost. Moreover, students discuss how Groom Energy can profit by helping companies overcome some of these barriers to adoption.

Seeking to go beyond global best practices in reducing environmental impacts, FIJI Water, a premium artesian bottled water company in the United States, launched a Carbon Negative campaign that would offset more greenhouse gas emissions than were released by the company's operations and products. The case examines the controversies surrounding this program as well as the program's impacts on the environment and FIJI Water's brand image. The company also faced decisions regarding how to best manage its relationship with the Fijian government, which recently dramatically raised imposed export taxes and could limit FIJI Water's access to water, its primary raw material. The case enables students to better understand the challenges of implementing an environmental strategy and of negotiating with parties that control raw materials, and invites discussion of the effectiveness of various approaches and the general lessons for the management of companies seeking to operate in an environmentally responsible manner.

Describes methods to calculate the carbon footprint (greenhouse gas emissions) of an organization's operations and supply chain, and a product or service. Illustrates concepts with examples of calculating the carbon footprint of an organization (Harvard Business School) and a product (a newspaper). Provides data necessary for carbon footprint calculations.

Having begun improving the environmental performance of its own operations, Aspen Skiing Company is considering "greening" its supply chain and lobbying for greenhouse gas regulations. A world renowned ski resort vulnerable to global climate change, Aspen's activities often garner media attention, which can promote its causes. But these initiatives, which attempt to compel other firms to improve their environmental performance, risk a public relations backlash and charges of "greenwashing" given that Aspen's ski resorts are themselves environmentally intensive operations.

Having begun improving the environmental performance of its own operations, Aspen Skiing Company is considering "greening" its supply chain and lobbying for greenhouse gas regulations. A world-renowned ski resort vulnerable to global climate change, Aspen's activities often garner media attention, which can promote its causes. But these initiatives, which attempt to compel other firms to improve their environmental performance, risk a public relations backlash and charges of "greenwashing" given that Aspen's ski resorts are themselves environmentally intensive operations.

Having begun improving the environmental performance of its own operations, Aspen Skiing Company is considering "greening" its supply chain and lobbying for greenhouse gas regulations. A world renowned ski resort vulnerable to global climate change, Aspen's activities often garner media attention, which can promote its causes. But these initiatives, which attempt to compel other firms to improve their environmental performance, risk a public relations backlash and charges of "greenwashing" given that Aspen's ski resorts are themselves environmentally intensive operations.

Genzyme Corporation is in the midst of planning its new corporate headquarters, which incorporates many innovative green building features. After learning that the building as planned would likely earn a LEED Silver rating, an intermediate score in the LEED green building rating scheme, the CEO charged the building team with exploring opportunities that would enable the building to earn the highest rating, LEED Platinum. Five additional green building features are described, and students are asked to analyze and recommend which, if any, of these features to pursue based on their cost, likelihood of earning LEED credits, and their influence on the building's environmental performance.

This case describes Millipore Corporation's approach to becoming a more environmentally sustainable company. As he prepared for his quarterly meeting with the CEO, the Director of Sustainability needed to develop positions on several issues. Tactically, he needed to recommend whether the company should purchase carbon offsets to help meet its aggressive greenhouse gas reduction targets, and whether to continue publicly reporting its greenhouse gas emissions and strategies despite recent problems. On a more strategic level, he needed to recommend how to take the company's Sustainability Initiative to the next level and consider whether changes were needed to its organizational structure. Finally, he needed to develop a more systematic approach to prioritizing investments in various projects being proposed to improve environmental performance.

This case describes how a company improves resource efficiency and process quality in its manufacturing process by developing a waste by-product into a new product. The case describes how CCP cleans production equipment between batches using styrene, which becomes a costly hazardous waste. Having worked on minimizing waste for the past 20 years, CCP believed it could not reduce the use of styrene without risking product quality. Instead, CCP was exploring the development of a by-product from its "rinse styrene," but faces uncertainty regarding the operational, financial, and environmental implications of doing so. This case contains data to support quantitative analyses of financial, operational, and environmental issues including some basic life-cycle analysis (LCA) calculations that focus on greenhouse gas emissions.

Trucost provided corporate environmental performance data and analysis to institutional investors and corporate managers, but after operating for a decade had yet to achieve profitability. Trucost was struggling to effectively differentiate its high quality products from its lower-cost competitors, and needed to develop a strategy to educate the marketplace and pursue new distribution channels. Increased investor interest in environmental issues—and an ever growing number of corporate environmental rankings—led to a proliferation of competitors to Trucost, and an industry shakeout was predicted. How should Trucost compete?

This case examines negotiations between a company and government over natural resources. The Fijian government proposed a substantial increase in its water extraction tax that would only apply to large extractors, and thus to FIJI Water and not to its competitors. FIJI Water responded by calling the increase "discriminatory" and threatening to shut down its operations, but in the end its negotiations resulted in its agreeing to pay the tax increase.

InterfaceRAISE is a sustainability management consulting firm created to leverage the capabilities of its parent company Interface Inc., a carpet manufacturer recognized as a global leader in corporate environmental sustainability. This case illustrates the challenges of turning an internal capability into a client‐facing revenue stream. This is made especially difficult by the fact that the parent company is a manufacturing firm and InterfaceRAISE is a professional service firm (consulting). InterfaceRAISE is not being staffed by a traditional consulting firm model, relying instead on the part‐time availability of employees in the parent company. At the time of the case, InterfaceRAISE was grappling to identify the appropriate business model for the type of consulting firm it wants to be, to determine what its client portfolio should look like, and to set its pricing structure. InterfaceRAISE needed to decide how to accelerate its growth while better achieving its three objectives: improving its clients' sustainability performance, enhancing its parent company's brand image and sales, and increasing operating profits.

Describes the social movement confronting conventional egg production techniques (battery cages) based on animal welfare concerns, and some merits and drawbacks of cage-free alternatives. Highlights animal rights activist campaigns, political and regulatory responses, and announcements by some companies to shift egg purchases or sales from conventional to alternative production methods.

This note describes the precautionary principle and its key tenets, highlights challenges associated with its use, and includes many examples of its application, primarily within the realm of regulating activities based on the risk of harm to human health and the environment. Appendices provide detailed examples of how the precautionary principle has been applied to regulations in three key industries: agriculture, chemicals, and pharmaceuticals. Describes various forms of the precautionary principle, its widespread adoption in international agreements, its distinction from cost-benefit analysis, its shift of the burden of proving that activities are safe from regulators to industry, and the importance of considering Type I and Type II errors and status quo bias when contemplating whether to evoke the precautionary principle.

This note is designed to help faculty embed environmental sustainability content into their core Operations Management course at the MBA or undergraduate level. It can also be used to identify cases with environmental content that can be used in operations electives such as Operations Strategy, Supply Chain Management, and Global Operations. Such integration is key to graduating students with the ability to identify and manage environmental challenges that confront (or will confront) their operations and supply chains, and with the perspective to understand when and how they can create and capture value by making their operations and supply chains more environmentally sustainable.

This case provides an opportunity for students to consider how large, multinational corporations should respond when targeted by activists regarding environmental and social concerns in their supply chains. Greenpeace targeted McDonald's because its chicken supplier was purchasing soya (soybeans for chicken feed) that were grown on recently deforested land in the Amazon rainforest. Although its supply chain purchased a very small amount of this crop, McDonald's collaborated with other soybean purchasers to avoid purchasing from such cropland. The supplemental materials (in the teaching note and technical note) describe animal husbandry practices associated with egg production, including an activist resolution calling on McDonald's USA to shift to "cage-free" eggs, as McDonald's in the United Kingdom has recently committed to do. This material fosters a greater understanding of the trade-offs associated with sustainability policies being set uniformly by headquarters (as with the soybean case) versus delegating such policymaking to regional managers better able to tailor policies to local stakeholder preferences (as with the egg production policies). The case and these supplemental materials also force students to grapple with defining what it means to have a "sustainable supply chain."

This spreadsheet supplement accompanies 617-010 United Airlines: More Out-and-Back Flying? and is intended to provide students with an opportunity to apply analysis concepts with real operational data.

This case looks at United Airlines when it is facing a decision on whether to shift its aircraft routing to more "out-and-back" routing in order to try to improve its on-time performance. As one of the world's largest airlines, United had a very large fleet and hub-and-spoke network that provided passengers with a wide range of destination choices, but as with any complex system unless everything ran perfectly all the time, it inevitably faced cascading delays and missed passenger connection problems. While out-and-back routing tended to isolate operational issues, more traditional linear routings tended to offer high equipment utilization. The case offers students an opportunity to examine the effects of variability on different routing strategies.

EnerNOC is an energy company with an innovative business model: it serves as an intermediary between electric utilities and electricity users. It contracts with electricity users willing to reduce demand during periods of peak energy demand, and sells this as excess capacity to electric utilities. The company is facing an upheaval in the energy markets due to the dramatic growth in natural gas fracking and the resulting increase in natural gas supply. The case enables students to evaluate the EnerNOC's business model--including its environmental implications--and the potential impact of fracking on its business. The case is accessible to non-specialists, as it provides background on the electric utility industry and the debate about fracking for natural gas. Given the substantial environmental impact of the energy and electricity industries, the case is particularly relevant for courses that focus on energy, the natural environment, and environmental sustainability.

This note describes the hybrid electic vehicle market, the results of different automaker strategies, and the environmental regulatory issues that can promote or inhibit market growth in the United States. Introduces students to the technologies and regulatory aspects of vehicles using alternative powertrains and fuels including hybrid electric vehicles, plug-in hybrids, electic vehicles, and deisel engines. Enable students to evaluate the success of the Toyota Prius, especially when used as an updated supplement to a case discussion of Toyota Motor Corp.: Launching Prius (HBS Case 706458).

Toffel, Michael W. "The Role of Organizational Scope and Governance in Strengthening Private Monitoring." Paper presented at the Business, Policy and Sustainability Seminar, George Washington University School of Business, April 2012.
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Toffel, Michael W. "Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies." Paper presented at the Institute for Work and Employment Research Seminar, MIT Sloan School of Management, April 2009.
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Toffel, Michael W. "Coming Clean...and Cleaning Up? Examining the Effects of Self-Policing." Paper presented at the Mossavar-Rahmani Center for Business and Government Business & Government Seminar Series, John F. Kennedy School of Government, March 2007.
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Toffel, Michael W. "The Role of Organizational Scope and Governance in Strengthening Private Monitoring." Paper presented at the New Insight into Quality and Environmental Practices, Université Paris-Dauphine, Paris, France, June 2012.
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Toffel, Michael W. "How Stringent is Private Regulatory Enforcement? The Role of Organizational Scope and Governance." Paper presented at the Annual Conference of the Production and Operations Management Society, Vancouver, May 1, 2010.
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Toffel, Michael W. "Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies." Paper presented at the Strategy and the Business Environment Conference, March 06–07, 2009.
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Toffel, Michael W. "Inspection Holidays and Compliance Outcomes: Examining the Outcomes of Self-Policing." Paper presented at the Strategy and the Business Environment Conference, March 30, 2007.
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In this podcast, we discuss the emerging phenomenon of CEO activism. We explain how political polarization in the U.S. and employee expectations around company values are pushing corporate leaders to enter into controversial political and social debates. We also hear from PayPal CEO Dan Schulman who talks about standing up for transgender rights and what he tells other CEOs who ask his advice on taking on an activist role.

This document provides a summary of the results of a survey on Environmental Management Practices (EMP) conducted by the University of California at Santa Barbara during October and November 2003. The survey was sent to 3255 facilities in 8 industrial sectors: pulp, paper and paperboard mills, chemical and allied products, refining, primary metals, machinery, electronics/electrical, automotive, and utilities. The survey yielded 562 responses, which constitutes a 17.2% response rate. This summary includes a general description of the sample, a profile of the respondents, and summary statistics of facilities' environmental management practices, relations with stakeholders, and environmental performance measures. In addition, we report the factors that respondents noted were influencing them to improve their environmental performance and adopt particular environmental management practices. In many cases, these results are categorized by industry to facilitate comparisons. The environmental management practices we inquired about include the adoption of an environmental policy and its communication, the number of internal and external audits performed at the facility, the proportion of employees in various departments receiving environmental training, "green purchasing" policies, the adoption of the ISO 14001 international standard, participation in industry and governments voluntary programs, and solicitation of opinions from environmental non-governmental organizations (NGOs). Overall, we identified important differences between industrial sectors in terms of the level of adoption of these environmental management practices. Companies can employ these survey results to benchmark their practices to facilities in their own industry as well as to other industries. In addition, government, NGOs, and local communities can employ this information to learn the prevalence of different environmental management practices across various industries, and to better understand how firms are motivated—and influenced—to adopt environmental management practices.

Research Summary

My research examines how companies strive to increase operational discipline, primarily in terms of environmental management and performance, but also with respect to occupational safety and process quality.
Most of my research papers have addressed two related questions: (1) Why do some companies adopt a more proactive environmental strategy than others?, and (2) Which environmental management approaches are particularly effective in improving environmental performance, and why?

I am examining codes of conduct, management process standards, and government voluntary programs that address environmental and labor issues, seeking to understand what enables some of these programs to actually deliver on their promise of distinguishing organizations as possessing superior management practices and operational performance.Current research projects in this domain include investigations of the following questions:

Under what circumstances do social audits of factories lead to sustained improvements in working conditions? How do social audit team characteristics affect operational improvements?

Why are some suppliers more willing than others to disclose to their buyers their carbon footprint and vulnerability to climate change? (working paper)

To what extent does adopting the ISO 14001 Environmental Management System Standard affect an organization’s environmental performance? (working paper)

To what extent are government policies that mandate green building practices in public construction projects stimulating the private sector green building market? (related: Genzyme Center case on LEED and green building practices)

This research focuses on transparency and information disclosure strategies, a topic of growing importance in environmental sustainability, corporate strategy, stakeholder relations, and public policy. My prior research in this area explored why some facilities were voluntarily disclosing compliance violations to the US EPA that their internal environmental compliance auditing programs had uncovered. Another article examined why some companies were voluntarily disclosing greenhouse gas emissions and the opportunities and risks they perceived global climate change was posing to their businesses. I have also looked at how managers respond to environmental ratings. My current research projects in this domain address the following questions:

Teaching

He also coordinates and teaches the Doctoral Seminar in Technology and Operations Management to help doctoral students develop research ideas, design studies, conduct robust analysis, and learn to clearly present their insights.

Awards & Honors

Winner of the Outstanding Conference Paper Award from the 2015 Alliance for Research on Corporate Sustainability (ARCS) Annual Conference for his paper with Jodi Short and Andrea Hugill, “Monitoring Global Supply Chains.”

Winner of the 2014 NBS Research Impact on Practice Award from the Network for Business Sustainability and the Academy of Management (AOM) Organizations and Natural Environment (ONE) Division for his article with Lamar Pierce, “The role of organizational scope and governance in strengthening private monitoring.”

Winner (with Matthew Johnson and David I. Levine) of the 2014 Coalition for Evidence-Based Policy Grant Competition on the subject of “Demonstrating How Low-Cost Randomized Controlled Trials Can Drive Effective Social Spending.”

Winner of the inaugural ARCS Sustainable Scholar Award from the Alliance for Research on Corporate Sustainability (ARCS) in 2014. This research career award seeks to recognize the leading pre-tenure scholar “in the area of corporate sustainability who is likely to make significant contributions to the advancement of corporate sustainability scholarship and practice.”

Winner of the Outstanding Conference Paper Award from the 2014 Alliance for Research on Corporate Sustainability (ARCS) Annual Conference for his paper with Susan Kayser and John Maxwell, “How multinational corporations can leverage stakeholder scrutiny to identify socially responsible suppliers.”

Received the 2013 Apgar Award for Innovation in Teaching.

Winner of the 2013 Paul Kleindorfer Award in Sustainability from the Production and Operations Management Society (POMS). The award recognizes “young scholars who have already distinguished themselves through the breadth and innovativeness of their scholarly work on questions related to sustainable operations and the social and environmental impact of business.”

Won the 2012 Doctoral Award for Excellence in Mentoring. Established by doctoral students, the awards recognize HBS faculty “who exemplify a deep commitment to fostering the personal and professional development” of HBS doctoral students.

Nominated in 2012 by the Strategic Management Society (SMS) for Best Conference Paper for Practice Implications at the SMS 32nd Annual International Conference for “Competition and Illicit Quality” (Bennett, Pierce, Snyder, Toffel, HBS Working Paper No. 12–071, February 2012).

Nominated in 2012 by the Strategic Management Society (SMS) for Best Conference Paper at the SMS 32nd Annual International Conference for “Competition and Illicit Quality” (Bennett, Pierce, Snyder, Toffel, HBS Working Paper No. 12–071, February 2012).

Awarded the Marvin Bower Fellowship in 2011 by Harvard Business School.

Won the 2011 Best Health Care Management Theory-to-Practice Paper Award in the Health Care Management Division of the Academy of Management for his paper with Julia Adler-Milstein and Sara J. Singer, “Managerial Practices that Promote Voice and Taking Charge among Frontline Workers.”

Selected for the 2011 Best Paper Proceedings of the Academy of Management for his paper with Julia Adler-Milstein and Sara J. Singer, "Managerial Practices that Promote Voice and Taking Charge among Frontline Workers."

Runner up for the 2010 Doctoral Award for Excellence in Mentoring. Established by doctoral students, the awards recognize HBS faculty "who exemplify a deep commitment to fostering the personal and professional development" of HBS doctoral students.

Won the 2010 Emerging Scholar Award from the Academy of Management's Organizations and the Natural Environment (ONE) Division. The award recognizes "a stream of research that has substantial ONE content and that has been published in premier scholarly outlets."

Won the 2009 D. Alfred N. and Lynn Manos Page Grand Prize for Sustainability Issues in Business Curricula for the HBS Elected Curriculum course, "Business and the Environment" with Forest Reinhardt.

Winner of the 2006 Charles H. Levine Award for Best Conference Paper from the Public and NonProfit Division of the Academy of Management for "Coerced Confessions: How Regulatory Deterrence Drives Self-Policing" (with Jodi L. Short, Academy of Management Best Paper Proceedings, 2006).

Runner up for the 2006 Academy of Management Best Dissertation Award from the Organizations and Natural Environment Division for "Voluntary Environmental Management Initiatives: Smoke Signals or Smoke Screens?" (University of California at Berkeley, 2005).

Winner of the 2006 Academy of Management Best Dissertation Award from the Social Issues in Management Division for "Voluntary Environmental Management Initiatives: Smoke Signals or Smoke Screens?" (University of California at Berkeley, 2005).